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NY K81682

January 29, 2004
CLA-2-64:RR:NC:247: K81682


TARIFF NO.: 6404.11.90, 9802.00.80

Ms. Sherri Desjardins
Menlo Worldwide Trade Services
1555 W. 23rd Street
P.O. Box 610715
Dallas, TX 75261

RE: The tariff classification of athletic footwear

Dear Ms. Desjardins:

In your letter dated January 7, 2004, you requested a tariff classification ruling on behalf of Spira Footwear for certain footwear styles. In addition, you inquire about design work and assists as they relate to this transaction.

You have submitted five footwear samples to be imported from an unidentified country and referred to as “running shoes.” You state that the goods are expected to be imported through the port of El Paso, TX. The samples are identified as follows:

SRL 101 Men’s Volare
SRG 101 Men’s Genesis
SRV 101 Men’s Vortex
SRC 101 Men’s Clarion
SRC 102 Women’s Clarion

You state that the uppers are constructed from a polyester sandwich mesh fabric with synthetic trim. The sole is made of an EVA midsole with a rubber outsole which is bonded to the upper by a PU cement process. A heat activated contact cement is used in this process. The sole is constructed with inner channels which contain heel springs at the back of the shoe and ball springs toward the front of the shoe. These channels and springs are not visible from either the inside or outside of the shoe. The estimated import value is $13.93 to $16.21 per pair. You suggest proper classification to be 6404.11.9020 Harmonized Tariff Schedule of the United States (HTS), for men’s models and 6404.11.9050 (HTS), for the women’s model.

The uppers of the five samples are made of a combination of textile and rubber/plastics materials. Visual examination of the sample uppers is inconclusive regarding which material predominates by external surface. Your proposed classifications indicate that you believe the constituent material comprising the greatest external surface area of the uppers for these styles is textile. For the purposes of this ruling, we will assume that this information and assumption is correct. This information may be verified at the time of importation.

The applicable subheading for styles SRL 101 Men’s Volare, SRG 101 Men’s Genesis, SRV 101 Men’s Vortex and SRC 101 Men’s Clarion, will be 6404.11.9020, (HTS), which provides for footwear with outer soles of rubber/plastics and uppers of textile material, sports footwear; tennis shoes, basketball shoes, gym shoes, training shoes and the like, other, valued over $12/pair, for men, other. The general rate of duty will be 20 percent ad valorem.

The applicable subheading for style SRC 102 Women’s Clarion, will be 6404.11.9050, (HTS), which provides for footwear with outer soles of rubber/plastics and uppers of textile material, sports footwear; tennis shoes, basketball shoes, gym shoes, training shoes and the like, other, valued over $12/pair, for women, other. The general rate of duty will be 20 percent ad valorem.

You describe the production process as follows:

Prior to actual production of the shoe there is an extensive process of design work as follows. A domestic design company produces drawings of the shoe to be marketed. At this point the drawings are design only. No technical specifications are created. These drawings are then passed onto a domestic product developer. The developer prepares from the drawings the shoe designs and creates product description packages that include the following; sample request forms, preliminary specification sheets (i.e. color and material selection for the upper, basic size and dimensions of the sole units, and line and design drawings), and references to shoe or material samples as needed to show the design concept. These are not engineering specifications but preliminary information needed to make a first pullover of the upper.

The product description packages are then sent to the foreign factory who creates production specifications and make sample prototypes of the upper and computer generated mold drawings of the outsole, midsole and other molded components as needed to make samples per the original design. The prototype(s) are sent to the product developer who determines if any corrections, changes, or enhancements need to be made. The sampling will require 2 to 4 “iterations” until the shoe is designed to the request.

Once the final product is determined the prototype and designs will go back to the foreign factory for production. The foreign factory developed the actual patterns and production specifications for the shoe. A final prototype will be created for whatever testing might be necessary. At this point the factory charges the importer for the testing prototype.

Upon approval the foreign factory commences commercialization for shoe production in all sizes and colors according to the specifications. This includes all technical product specifications, mold drawings and upper patterns. A final prototype (confirmation sample) will be created for whatever testing may be necessary. There are no charges accessed to the importer for this process.

In the situation that you describe, the domestic design work sent to the foreign manufacturer is not an assist pursuant to § 402 (h)(1)(A)(iv). Customs has consistently held that design work undertaken in the U.S. is not an assist and, therefore, not included within the transaction value of the imported merchandise.

You further explain:

All components used to manufacture the shoe are provided by the factory with the exception of the heel springs and the ball springs. The springs are purchased domestically by Spira, the importer of record. All springs are manufactured specifically to size and shape upon order. Product is then transported to a domestic “metal improvement” facility. At this facility the springs are placed in containers where a “shock peening” process is performed which strengthens the metal spring. The springs are then shipped to the foreign factory for production. Spira is billed directly by the spring manufacturer, metal improvement processor and freight company for shipment to the factory.

Springs are in “ready condition for assembly” when they arrive at the factory and are eligible for 9802 tariff treatment. We determine the cost declared for the springs to include, cost of the original product, the cost of the shock peening process, and cost of the freight to the place of production. Assists which need to be declared are mold charges, and cost to ship the springs to the foreign factory for production.

You indicate that the springs are purchased domestically but make no mention of the country of origin of the springs. For purposes of this ruling, we will assume that the springs are manufactured in the United States.

Subheading 9802.00.80, HTSUS, provides a partial duty exemption for:

Articles assembled abroad in whole or in part of fabricated components, the product of the United States, which:

(a) were exported in condition ready for assembly without further fabrication,

(b) have not lost their physical identity in such articles by change in form, shape, or otherwise, and

(c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating, and painting.

Articles entered under this tariff provision are subject to a duty upon the full value of the imported assembled articles, less the cost or value of the U.S. components assembled therein, provided there has been compliance with the documentation requirements of section 10.24, Customs Regulations (19 CFR 10.24). The exemption applies only to fabricated components of U.S. origin, and the fact that components were purchased in the U.S. is insufficient, by itself, to establish that they were produced in the U.S.

"Assembly" operations for purposes of HTSUS subheading 9802.00.80 mean the fitting or joining together of fabricated components, such that the components are in a fixed relationship to each other. Acceptable assembly operations are interpreted at section 10.16(a), Customs Regulations (19 CFR 10.16). Force fitting of the springs into the footwear is an acceptable “assembly” process. Providing that the requirements of the applicable customs regulations are met to the satisfaction of the port director, the U.S. springs are eligible for the duty exemption afforded under heading 9802.00.80, (HTS).

The submitted samples are not marked with the country of origin. Therefore, if imported as is, it will not meet the country of origin marking requirements of 19 U.S.C. 1304. Accordingly, the footwear would be considered not legally marked under the provisions of 19 C.F.R. 134.11 which states, "every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article."

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist, Richard Foley at 646-733-3042.


Robert B. Swierupski

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